The creation of the Economic and Monetary Union was completed
in the year 1999. The mechanisms of management of economic policy
are rather peculiar. On the one hand, there is monetary policy,
which is the only one handled by a supra-national and independent
organism, the Central European Bank. On the other hand, the other
components of economic policy, the budget, the structural aspect,
and salaries remain under the direct responsibility of national
governments. This asymmetry has demanded the identification of
a well-defined coordination structure of these policies. The Treaty
has placed economic policy trends (art. 99) at the center of the
coordination process. They represent the moment of synthesis in
the management of economic policies.
Budget policies and the Stability and Growth Pact
Budget policies are coordinated by the Stability and Growth Pact,
which has essentially made plain the procedure of excessive deficits
of the Treaty (art. 104), with the purpose of making fiscal discipline
permanent. The Pact has recently been modified by regulations
1055 and 1056 of 2005, mainly to provide an instrument which is
both more flexible and adaptable to the actual economic situation.
The system is based both on preventive instruments, devoted to
promoting corrective actions in case of budget deterioration,
and on “repressive” actions, destined to bring the
deficit back under the 3% limit in the deficit-GNP relationship.
Prevention is assured by a continuous supervision of budget trends
by the Commission. An early warning procedure that the Council
can adopt to promote corrective actions by the interested State
is also provided for. “Repressive” actions are represented,
on the one hand, by a warning that the Council gives to indicate
to the State the necessary corrective measures in the presence
of a deficit superior to the aforementioned limit of 3%; on the
other hand, by monetary sanctions that the Council imposes on
the State in case of inertia in adopting these measures. Each
year, Member States submit stability programs (for those who participate
in the Euro) or convergence programs (for those who don’t)
to the Commission and to the Council. In these, the short-and-
medium-term public finance objectives are indicated, as well as
the proposed procedure to reach them.
Reform of product markets and capital (Cardiff process).
The Cardiff process is devoted to promoting the improvement of
product markets (goods and services) and of capital through their
coordination, on a voluntary basis, throughout Europe. It takes
its name from the European Council held in Cardiff in 1998, where
it was decided to establish a smooth procedure through which one
could appraise the progress obtained by Member States in those
sectors. To this end, the States have to present an annual national
report on the progress carried out. Based on this progress, the
Commission elaborates a synthesis report devoted to presenting
a complete picture of the integration process of markets and to
contributing to the exchange of the best practices.
Macroeconomic dialogue (Cologne process).
This further process, introduced during the European Council of
Cologne (1999) has as its objective the re-enforcement, on a Community
level, of the relationships between those responsible for macroeconomic
policies and the social partners, with the purpose of promoting
non-inflationistic economic growth with a high employment content.
Representatives of the Central European Bank, of the Council,
of the Commission, and workers’ and business representatives
meet twice a year, both on a technical and a political level,
in order to examine the status of the European economy.
Lisbon Strategy
At the European Council of Lisbon (2000) it was decided to rationalize
the various coordination processes. To that end, the Spring session
of the European Council has been institutionalized (“Spring
Council”); it is dedicated to economic, social and environmental
matters. In March of 2005, the European Council reformed the Lisbon
Strategy by centering it on two cornerstone objectives: economic
growth and employment. Some procedural aspects have been modified,
foreseeing, among other things, new “national reform programs”
defined each year by the Member States.
Lastly, economic policy trends have been made to converge, together
with the orientation in employment matters, in “integrated
orientations”. In any case, policy trends continue to have
a central role in the management of economic policy and in guaranteeing
coherence for the various objectives.
